DUSHANBE, May 27, 2015, Asia-Plus — The World Bank’s spring 2015 edition of biannual Tajikistan Economic Update says there is minimal financial intermediation in Tajikistan, and the financial system cannot do much to support economic growth.
The country ranks low in credit and deposit penetration compared to neighboring countries. Deposits as a share of GDP were 14.2 percent in 2014, up slightly from 13.1 percent for 2013. Credit to the private sector as a share of GDP jumped from 19 percent in 2013 to 20.2 percent in 2014; at 53 percent in 2013 and 32.6 percent 2014, credit growth has been worryingly rapid considering the high nonperforming loans (NPLs) and weak financial sector governance.
On the “getting credit” indicator in Doing Business for 2015, out of 189 economies, Tajikistan is ranked 116th. Improving access to credit, particularly for small and medium-sized entities (SMEs), requires that among other actions Tajikistan enforce regulatory standards, build up its credit culture, develop its financial infrastructure, modernize its secured transactions system, and promote better risk management.
The report notes that conditions in Tajikistan’s banking sector worsened in 2014. Banking system indicators point to continuing erosion of asset quality, and the reported nonperforming loans (NPLs) rose from 23 percent at yearend 2013 to 27.2 percent in December 2014. Actual NPLs are likely even higher, as loans are still significantly misclassified.
